The Abu Dhabi airline Etihad has re-entered the fray to pick up a stake in beleaguered Jet Airways and will compete with two “unsolicited bids” that were submitted to State Bank of India last week. “Etihad has confirmed its interest to re-invest in a minority stake in Jet Airways, subject to conditions” an Etihad spokesperson said. Etihad reiterated its earlier stand that it cannot be the sole investor and would need suitable investors to provide the majority of Jet Airways’ required recapitalisation.
If Etihad is indeed able to revive Jet with some Indian partners, then the twin UAE airlines - Emirates (along with its budget arm Flydubai) and Etihad, which operate from the mega hubs of Dubai and Abu Dhabi - will get a feed from both Jet and SpiceJet. British entrepreneur Jason Unsworth and Adi Gro aviation are also understood to have put in unsolicited bids. Adi Gro aviation is part of the Sanjay Vishwanathan-promoted, London-based Adi Group.
SBI made provisions for its loan
SBI chairman Rajnish Kumar said the lenders had already made provisions for its loans to Jet and was not worried about a default. Given the conditions placed by Etihad, lenders expect that the government will need to take a call. Since election results are expected to be annonced soon, it is expected that the decision will be left to the new government.
Other lenders have made similar provisions. Syndicate Bank MD & CEO Mrutyunjay Mahapatra said that his bank had followed SBI in making provisions for Jet. "SBI, being the leader of the (lenders') consortium, made disproportionate efforts to keep it flying. Otherwise, if it was any other account, we would not have bothered over it," said Kumar. According to Kumar, the bank’s £160 million loans to Jet was only 0.07% of its total loan portfolio of £230 billion. He said that the bank made extra effort to save the airline because it was a 'good’ airline.
Answering a query on why SBI had not supported the airline with the £140 million emergency funding announced earlier, Kumar said that the funding was subject to certain covenants which were not fulfilled.
SFIO to probe if Jet promoters siphoned off funds
Meanwhile, India's Ministry of Corporate Affairs (MCA) has asked Serious Fraud Investigation Office (SFIO) to initiate a probe into Jet and its subsidiaries over suspicions that the promoters of the company siphoned off funds. Weighed down by a debt burden of £840 million, the airline had to suspend operations in mid-April after it ran out of funds to stay afloat.
The government has discovered enough evidence of money siphoning, and it warrants SFIO probe, reports said. The report of Western Regional Director was submitted earlier this week, which was examined in detail by the ministry before the probe was ordered, the report further added.